In today’s briefing:
- The Global Liquidity Cycle
- Out of the Box: Central banks are insolvent. How do we deal with it?
- 5 Things We Watch – Central Bank Outlook, USDJPY, Natural Gas, Credit & Liquidity
- Out of the Box #22: Higher for Longer, Yes. But Not What You Expect
- EIA Watch: Strong Energy Demand Month in October, Except in Nat Gas
- US Policy Watch: Speakership chaos and IRA explained
- EM by EM #27 Not a Bazooka, but a Pumpgun
- CX Daily: China Readies Relaunch of Shelved Carbon Credits Program
The Global Liquidity Cycle
- The steepening US Treasury yield curve is consistent with a rising Global Liquidity cycle
- Independent evidence shows that the Global Liquidity cycle bottomed in October 2022 at an index of 11.8 (range 0-100)
- The next Global Liquidity cycle peak is unlikely before September 2025. The investment cycle is in a Rebound investment phase
Out of the Box: Central banks are insolvent. How do we deal with it?
- In our “out of the box” series, we aim at being ahead of the current consensus narrative and think of the next theme that could drive price action before anyone else has given it any noteworthy attention.
- This week we look at the insolvent G10 central banks and how to deal with them.
- It is probably not a newsworthy conclusion to central bank aficionados, but the big question is whether it matters and potentially WHEN it matters.
5 Things We Watch – Central Bank Outlook, USDJPY, Natural Gas, Credit & Liquidity
- Global macro never sleeps, and this week is no exception with ongoing turmoil in US equity space amidst the big 7 reporting earnings.
- The last quarter of the year will most likely define how asset markets will perform well into next 2024 with USDJPY hovering just below the all important 150 handle and global central banks likely heading towards the end of their cutting cycle.
- As always, we have collected 5 of the things we find to be the most important to watch in the current landscape.
Out of the Box #22: Higher for Longer, Yes. But Not What You Expect
- Main points:– The economic outlook is uncertain and Biden is spending like there is no tomorrow.
- Recession in 2024 remains our base case– The Congress seems incapable of enforcing any fiscal discipline.
- Higher structural TGA levels needed for the Treasury.
EIA Watch: Strong Energy Demand Month in October, Except in Nat Gas
- Welcome to our inaugural EIA Watch.
- Every Thursday, we will assess the demand side of the energy equation via our sophisticated seasonally adjusted models based on the weekly EIA time series.
- Conclusions up front: EIA fuel data remains weaker than suggested by actual congestion on roads, in ports and in the air.
US Policy Watch: Speakership chaos and IRA explained
- The U.S government will shut down November 17th if a full Congress doesn’t pass 12 individual budget laws – or so-called appropriations – or adopt another Continuing Resolution (CR) that would extend the FY23 budget.
- A new CR is hard to imagine given that the GOP lost their former Speaker, Kevin McCarthy, after the first CR was passed.
- The U.S federal debt has undoubtedly featured heavily in the closed-door Speaker negotiations in the Republican Caucus. Cutting the nation’s $33 trillion dollar debt is a big priority among the far-right members of the GOP who ousted McCarthy – members who want promises heading into budget negotiations.
EM by EM #27 Not a Bazooka, but a Pumpgun
- Conclusions upfront: The Chinese stimulus package is too small and the composition underlines the domestic issues in China.
- If Chinese consumers remain conservative, the efforts could be undermined.
- We won’t be surprised to see more policy easing in 2024.
CX Daily: China Readies Relaunch of Shelved Carbon Credits Program
- Carbon / In Depth: China readies relaunch of shelved carbon credits program China is one step away from relaunching its voluntary carbon credits program after updating key rules for the system, which it shelved more than six years ago due to a lack of uptake and regulatory issues.
Plagiarism /: Chinese artist fined $684,000 in ‘landmark case’ for plagiarizing foreign work
Personnel /: China names Lan Foan to be new finance minister
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